North Carolina ethics laws have been improved but still need more work

Not that it ever went very far away, but the issue of ethics in state government is back in the news these days. The main hubbub this week surrounded the disclosure that officials of the state Division of Motor Vehicles and Division of Air Quality accepted all sorts of goodies from the corporate behemoth Verizon Business. That would be the same Verizon Business that received a no-bid state contract worth more than $50 million.

The DMA/DAQ disclosures prompted swift action by Governor Perdue, who issued an executive order on Thursday expanding the coverage of the general statutory ban on gifts from contractors to state employees in certain decision-making roles. Under Perdue's order, the gift ban now applies to all state employees under her direct supervision (some employees of other Council of State officials do not report to the Governor).

The latest news comes on the heels of word earlier this week that the State Board of Elections would hold investigatory hearings into the much reported controversy surrounding former Governor Mike Easley and his acceptance of free travel and other perks from private individuals during his tenure in office.

An ambiguous ban

In addition to provoking a new round of public frustration and outrage, both of these recent developments served to highlight a major problem with North Carolina law. Despite the laudable effort that occurred in 2006 to tighten state ethics rules in the aftermath of the Jim Black scandal, the fact remains that the job is still only half-complete – especially when it comes to a gift ban. Here's why:

When Governor Perdue issued her executive order this week, what she actually did was to extend the applicability of a state law that regulates "gifts and favors" provided by "contractors for public works." At first blush, it would appear that the ban is airtight. The opening paragraphs of the relevant section (G.S. 133-32) state plainly that "it shall be unlawful" for any of a number of specified contractors to "make gifts or to give favors" to any of a number of specified state officers or employees. So far, so good.

The problems and ambiguities arise when one reads a little further in the law down to Section (d) of G.S. 133-32. There one finds the following language:

"This section is not intended to prevent a gift a public servant would be permitted to accept under G.S. 138A‑32, or the gift and receipt of honorariums for participating in meetings, advertising items or souvenirs of nominal value, or meals furnished at banquets."

The reference to 138A-32 is critical because it is a link to the State Government Ethics Act that was the subject of the 2006 law changes. That section of the law contains another long list of exceptions to the ban on gifts from lobbyists to specified public officials.

Some of these exceptions are genuinely trivial and make sense. It's okay, for instance, to give public officials "informational materials" relevant to their duty like a fact sheet or a brochure. It's also probably harmless that officials are allowed to receive "a plaque or similar nonmonetary memento recognizing individual services in a field or specialty or to a charitable cause."

Many of the rest of the exceptions, however, raise real red flags and run the risk of swallowing up a lot of the gift ban rule.

For instance, there are exceptions for:

• "Reasonable actual expenditures…for food, beverages, registration, travel, lodging, other incidental items of nominal value, and entertainment" connected with various specified meetings;
• "…food and beverages, transportation, lodging, entertainment or related expenses associated with the public business of industry recruitment, promotion of international trade, or the promotion of travel and tourism…";
• "Gifts given or received as part of a business, civic, religious, fraternal, personal, or commercial relationship…" provided certain criteria are met; and
• Food and beverages "for immediate consumption" at a number of specified types of events.

In short, though carefully drawn and a lot better than the old law that had allowed pretty much any kinds of gifts to lawmakers and other officials so long as it was about developing "good will" and not (wink, wink) about lobbying for or against a particular bill or proposal, the current gift ban remains chock full of significant loopholes.

Under current law, for instance, Verizon Business is free to bestow trips, hotel stays, sumptuous meals, and tickets to sporting events and concerts on a variety of public officials so long as it is for purposes of attending a number of specified meetings related to the officials' duties.

Why should this be so?

The explanation often provided by defenders of such a giant loophole is that it should be state policy to encourage lawmakers and other officials to attend and present at official gatherings like the National Conference of State Legislatures. After all, goes the argument, it's good for the state if lawmakers have an opportunity to learn from their peers in other states and to represent North Carolina on various national stages.

To which reform proponents would likely respond: "True enough, we want our officials to travel and learn and represent the state, but why should that be paid for by Verizon Business (or Google or Blue Cross Blue Shield or any other private entity)? If attendance at such events is truly in the best interest of the state, why shouldn't the state pay for it?"

Crafting better laws

While Governor Perdue is to be commended for bringing a lot more people under the general gift ban rules, it's clear that the "ban" itself needs a good deal more work. If North Carolina is serious about making absolutely clear that its employees and elected officials have absolutely no conflicts of interest (or even the appearance of one) it simply will not do to continue to allow wealthy private interests to bestow gifts upon them that they would never provide to ordinary citizens.

Ironically, one important overarching solution for many of these problems (especially for lawmakers) would probably involve the appropriation of more public funds to significantly boost compensation and reimbursement. Such a change would send a message that North Carolinians would rather pay their officials more and cover more of their expenses than let them go begging (or be beholden to) private corporations.      

In addition, these are not the only ethics law changes that remain on the state's "to do" list. As has been explained repeatedly by the good folks at the N.C. Coalition for Lobbying and Government Reform, similar additional tightening is required of the statutes that govern:

• the so-called "revolving door" in which individuals flit between public jobs and high-paid private employment in the same field,
• the disclosure requirements placed on appointees to major boards and commissions – right now we have scant information about the political contributions that may have led to their appointment; and
• so-called "pay to play" rules that would bar many political contributions by state contractors.

Setting the record straight

In short, despite important progress, North Carolina's journey toward ethical excellence in state government remains a long way from complete. Governor Perdue's actions this week represent a good interim step, but only that. In 2010, she and the General Assembly should finish the job.